YHLO "piggybacks" on brain-computer interface hype: suspected misleading statements, company and executives face proposed fines of 7.5 million yuan.
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Recently, due to allegedly exaggerating and misleading investors when disclosing its cooperation with a brain-computer interface company, Sci-Tech Innovation Board-listed company Yahuilong and its executive team are facing strict regulatory penalties.
On February 28, Yahuilong announced that it had received the "Advance Notice of Administrative Penalty" issued by the Shenzhen regulatory bureau.
Regulators found that Yahuilong seriously deviated from objective reality when disclosing its strategic cooperation with Shenzhen Brain Machine Starlink Technology Co., Ltd. (hereinafter "Brain Machine Starlink").
Yahuilong’s previous announcement claimed that Brain Machine Starlink specializes in both “non-invasive and invasive dual technology paths.”
However, Brain Machine Starlink only possesses non-invasive technology, and except for having a sample of the vagus nerve stimulator, all other products are still in the research and development stage and do not even have prototypes yet.
According to sources in the industry, the technical difficulty between invasive and non-invasive approaches is vastly different.
The former requires craniotomy or interventional surgery to implant probes to read neural signals; the latter is much simpler and only requires wearing relevant devices outside the skull to read signals. For example, one of the most high-profile companies in the current brain-computer interface industry, Neuralink, uses an invasive technology path.
Moreover, when facing inquiries from the Shanghai Stock Exchange, Yahuilong still did not fully disclose the actual development stage of the products and even claimed that Brain Machine Starlink "already had orders" in the area of non-serious medical products.
But regulatory investigations revealed that the so-called orders were merely framework cooperation agreements, without any real orders.
The Shenzhen Securities Regulatory Bureau believes that Yahuilong’s above disclosures have caused or may cause investors to make erroneous judgments, suspected of violating relevant provisions of the Securities Law and constituting misleading statements.
In response, the regulatory department intends to implement the following administrative penalties:
First, Yahuilong is ordered to make corrections, given a warning, and fined 4 million yuan;
Second, the company chairman Hu Penghui and board secretary Wang Mingyang are both given warnings and fined 2 million and 1.5 million yuan respectively.
In the capital market, listed companies hyping up hot topics and concepts often come with extremely high risks of violating information disclosure regulations. Yahuilong’s “forced” association with the brain-computer interface concept, resulting in a 7.5 million yuan fine, undoubtedly sounded an alarm for the market: truthfulness, accuracy, and completeness are the bottom line for information disclosure. Any attempt to mislead investors through word games will ultimately not escape the scrutiny of regulators.
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